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April 21 — Now that you’ve finished wrestling with Internal Revenue Service forms and instructions for another year, here comes Yale economics professor Robert Shiller with a novel idea: He wants to make the tax code more complex.

Before you scream, give the guy a chance. After all, if you had listened to him three years ago — when his book “Irrational Exuberance” was published at the height of the stock market bubble — you might be considerably more wealthy than you are today.

Still, Shiller is encountering a lot of skepticism as he flits about the globe promoting the provocative ideas of his latest book, “The New Financial Order,” which offers a six-part prescription for mitigating economic risks faced by nations and ordinary individuals.

In addition to overhauling the tax code, Shiller advocates “livelihood insurance” to protect against structural changes that cause unemployment, home equity insurance to guard against housing bubbles and a new system of Social Security that would tie payments to U.S. economic performance.

Shiller calls it the “democratization of finance” — using the same sophisticated financial tools that corporate managers rely on to hedge against risk and applying them broadly.

“We really don’t manage risks very well in everyday life,” he said on a recent book tour stop in Seattle.

Livelihood insuranceOne of the more controversial ideas in Shiller’s new book is for livelihood insurance, which would might help an airline pilot, for example, guard against the possibility of a massive industry downturn. For a steel plant worker, livelihood insurance might be provided through a labor union, paying off in the event of a plant closure caused by competition from South Korea. Even an economics professor might be interested in a policy to protect against the loss of earning power caused by the increasing popularity of distance learning, Shiller said.

“I’ve been thinking I would buy it,” said Shiller. “Why not allocate something to that?”

An even more radical proposal would require a complete overhaul of the tax code to reduce the gap between rich and poor, which Shiller regards as one of society’s biggest risks.

“Should inequality get substantially and chronically worse, it would create classes of resentful people and fundamentally change the nature of our society,” he writes. “These shocks can wreak havoc on our lives.”

Insurance against inequalityShiller’s idea is to scrap fixed marginal tax rates, which he considers arbitrary, and replace them with a more flexible tax system he calls “inequality insurance.” Shiller gives only the basic outlines but says tax rates should fluctuate automatically in line with macroeconomic performance and government financing needs, among other factors. Such a system necessarily would be even more complicated than the current Byzantine federal income tax code, Shiller said recently at a lecture to promote his book, provoking a few groans from the audience. The professor quickly added that he would not advocate such a change except for recent advances of information technology, which he said should allow for automated tax collection and rate adjustments.

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Still, Shiller says his proposals on inequality insurance have drawn some harsh criticism, which he seems not to mind.

“This is the first time this inequality insurance has been proposed, so don’t expect it to sound obvious,” Shiller said in an interview. “Some people call me socialistic, even though I would rather be thought of as pushing capitalism to its logical conclusion. Most of the proposals in the book are to advance financial management … . There is nothing particularly socialistic about it, as I see it.”

Shiller’s friend Jeremy Siegel, a professor of finance at the Wharton School, confirms that Shiller has no political axe to grind in warning against growing income inequality on both a national and global scale. Over the years, Shiller’s ideas have appealed to a wide range of investors and policy-makers, Siegel said.

“He’s interested in political issues, but he himself doesn’t get pegged,” Siegel said.

Radical ideasSome of Shiller’s ideas clearly would require seismic shifts in the political climate, including his proposal to overhaul Social Security by eliminating the promise of a fixed, inflation-indexed monthly payment. Many other ideas would rely on the creation of new financial markets that do not yet exist.

Shiller admits that many of his ideas are radical. Some of them raise the issue of “moral hazard,” which occurs when there is an economic disincentive to work, for example, or properly maintain his house. But Shiller offers solutions to the issue of moral hazard, and he points out that many financial instruments we take for granted, such as life insurance, took decades — even centuries — to win broad acceptance.

One thing is certain: Nobody can accuse Shiller of simply offering up academic theories and then retreating to his ivory tower in New Haven, Conn. He and colleague Allan Weiss have patented a new type of security that would make it possible to trade on changes in average home prices in various metropolitan markets, and Shiller has been making the rounds on Wall Street drumming up interest. Pending approval by U.S. regulators, Shiller said such a market could become a reality as soon as this year.

Home equity insurance, a related idea originally proposed by Shiller and Weiss a decade ago, actually is available in Syracuse, N.Y., under a pilot program underwritten by the federal government. Under the program policy-holders are paid if the average home price in the neighborhood has dropped by the time the home is sold, as long as they have owned the home for at least three years.

So far insurance companies have expressed little interest, but Shiller said it makes sense to expand the program nationwide. Because just as Shiller warned of a stock market bubble in late 1990s, today he cautions against a potential housing bubble in certain overheated markets.

“Right now just the mere fact that you want to live in a house is causing people to take very risky positions in their regional real estate market,” he said.